Local vehicle production seen to double in 5 years

Local production of motor vehicles in the country is expected to reach more than 100,000 units this year, a figure that may possibly double in five years’ time should the government’s Comprehensive Automotive Resurgence Strategy (CARS) program gain significant ground.

Assistant Trade Secretary Rafaelita M. Aldaba said in a presentation Friday the CARS Program, which dangles some P27 billion worth of incentives to vehicle assemblers, was expected to further increase the share of locally produced vehicles in the domestic market. The ratio currently stands at about 70:30 in favor of imported units available in the market.

“The increase is not going to be drastic, but gradually, the share of locally assembled [vehicles will increase]. That’s why we need to monitor this program and evaluate it after six or seven years to see if there’s going to be a need to extend the program … Also, we’re an open market and so the competition among automotive manufacturers is stiff. This is why I think the increase in domestic share will be gradual,” Aldaba said.

She said the goal is to eventually make the Philippines a regional hub serving the Asean market. “There are huge opportunities and if this program takes off as planned, there is a huge chance for us to become an exporter.”

The applications from interested participants are also expected to contain provisions on the proposed exports once the program is fully implemented.

A discussion paper entitled “Industrial Policies and Implementation: Philippine Automotive Manufacturing as a Lens,” citing estimates of the Philippine Automotive Competitiveness Council Inc. (PACCI), said the local sector has “the potential to make 273,000 units by 2017 [of which 225,000 will be for domestic market and 48,000 for exports market] and 506,000 units by 2022 [of which 350,000 for domestic and 156,000 for exports market].”

With the CARS Program, the Philippines is also expected to cash in on the third wave of motorization happening between 2015 and 2022. During this period, vehicle sales in the Philippines is expected to hit 500,000 units out of the expected regional demand of 3 to 6 million units.

Aldaba said the government was currently looking at various vehicle demand stimulating measures, including the possibility of phasing out old vehicles.

The government issued last year Executive Order No. 182 that provided for the implementation of the CARS Program. The latter was expected to attract more than P27 billion in new parts manufacturing investments, produce at least 600,000 vehicles, generate some 200,000 new jobs, and stir total economic activity estimated to be worth P300 billion.

The resulting contribution to gross domestic product was estimated at about 1.7 percent.